[Shanghai] China’s wood flooring industry is booming but undergoing dramatic change as leading suppliers consolidate their power, struggle with adopting sustainability standards and cope with rising labor and raw material costs, according to industry leaders participating in the third annual Wood Flooring Forum, held here, March 25.

“It’s safe to say our wood floor industry grew 22 percent last year,” said Sun Jian, director of China’s timber industry management and state forestry administration. “We continue to benefit from broad American and European markets but our labor resources get more expensive and limited day by day. We now need to shift our focus to China’s key, large companies and building their brands. Our opportunities still trump the challenges as long as we take advantage of our strengths.”

China currently has 556 solid hardwood, 502 engineered wood and 98 bamboo floor manufacturers according to the latest figures from the China National Forest Products Industry Association (CNFPIA). However, those numbers are “declining dramatically” as smaller factories find it increasingly difficult to compete for lumber and employees in the face of the nation’s growing mega mills, according to Kelin Ye, vice chairman, CNFPIA.

“China’s larger producers are busy regionally and as leading OEM exporters,” he said. “As for smaller companies, they can either adjust by producing more specialized products or they can exit.”

“Flooring companies are experiencing more pressure importing tropical wood because of the growing list of animals and trees facing extinction, especially from Madagascar and Latin America,” said Ye. “There are a lot restricted areas which we can no longer buy from. This is all related to international law compliance.”

While the CNFPIA is currently reviewing potential Chinese environmental regulations of its own, hazardous levels of volatile organic compounds (VOCs) found in inferior Chinese wood products have already begun to negatively impact domestic sales.

“Society is paying a lot of attention to the formaldehyde issue. It is forming a negative image of the industry and we need to solve this problem now. The quality is improving but there are still too many problems. We have prepared national standards for hardwood which are in line with international standards and they will soon be released and implemented.”

Don Finkell, chairman of the board for the Washington, D.C.-based Hardwood Federation, applauded China’s efforts to sustainably grow its wood floor industry. The Hardwood Federation works with Congress and the Administration to develop regulation and policy for the American hardwood industry.

“We expect further action by U.S. custom officials to check that products comply with environmental law,” said Finkell. “It would be good for China to get ahead of the game. Right now, hardwood from the U.S. is considered legal and at very low risk of having originated from illegal logging; as well as wood from Australia and Europe. This is the future landscape.”

Finkell told attendees that U.S. regulators now require wood floor importers to have clear procurement policies and illegal logging risk evaluations for each country of origin from which lumber is obtained. The risk of illegal logging for each species must also be evaluated, along with permits and supply chain audits from each country. What’s more, organizations have to train their employees to comply with regulations and records must be maintained for five years.